November 04, 2015
What On-Demand Delivery Startups Can Learn From ‘Lawn Chair Larry’
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This article was originally published on blog.uship.com on November 19, 2015 at 3:00 pm
You can view the original article by clicking here.
For those unfamiliar with this story, let me tell you about Larry Walters (a.k.a. “Lawn Chair Larry”). To me, there seems some striking similarities between one of Larry’s better-known life experiences and the current state of the on-demand delivery market.
On July 2, 1982, Larry took a flight from his backyard in San Pedro, Calif., in a homemade airship consisting of a garden variety Sears lawn chair and 45 helium-filled weather balloons. The next step in this ingenious plan was to strap Larry to the lawnchair along with sandwiches, beverages (alcoholic variety, no doubt), and, of course, a pellet gun. After not-so-careful consideration, Larry’s buddies cut the ropes that connected his “chairship” and the bumper of his personal vehicle. What could possibly go wrong?
Instead of gently gliding up to 30 feet — Larry’s planned altitude — he immediately shot up like a rocket to 15,000 feet. Understandably this made Larry afraid to use the pellet gun, that was, until he drifted into the primary air traffic approach at Long Beach Airport much to the surprise of Delta and TWA airline crews.
After 45 minutes he finally got the guts to shoot out some of the balloons only to descend into high voltage power lines causing a local area blackout. Somehow Larry got on the ground in one piece where he was immediately arrested.
Amongst his other career adventures, Larry was a truck driver, but that is not the real parallel. First of all, he has nothing in common with professional truck drivers. I have met a lot of them over the years and all of them are super-smart, business people where safety is an inherent part of their DNA — not a high priority for Larry.
However, it could be reasonably argued that Larry’s “planning,” and that of some on-demand delivery start-ups, are similarly well thought out.
Let’s take a look at the operating scenario of a well known provider in this space:
Doing all this in one or two hours work overall — and it certainly won’t scale. Better yet, it is at odds with current customer wants and needs. The Boston Consulting Group has reported that consumers want free shipping a huge amount more than they want same day. Is there a latent demand for near-immediate delivery on a broad basis? Maybe, but if there is, it probably won’t be before a lot VC-funded on-demand providers run out of very expensive money.
Having been involved in consumer delivery for quite a while, I have observed two realistic ways to drive delivery efficiency: 1.) Increase packages per on road hour through millions of shipments – or – 2.) Increase revenue per stop through heavier, larger-than-parcel items.
Most on-demand delivery services do neither. Nonetheless, some of these companies seem bound and determined to raise massive amounts of VC money while ignoring the iron laws of physics, geography and time. Zigging and zagging back and forth between low revenue stops just doesn’t make sense to people who understand delivery fundamentals. Maybe I need to channel my inner Lawnchair Larry and have him explain it to me.
FedEx, UPS, USPS and many local/regional parcel couriers get it through high volume of non-same day route deliveries. The other route model that “gets it” is powered by the pimply faced kid who for next to nothing plops your morning newspaper on your porch so early that it is late.
Others making it work focus on driving efficiency with higher revenue per stop. For example, the delivery of a car bought on eBay Motors six states away or a used dresser bought online six miles away. Both require the eyeballs, hearts and minds of a massive number of shippers and carriers. Our company, uShip, provides the only transportation marketplace for 3.2M shippers to arrange delivery of larger items with 670K of the best service providers on Earth — be it B2B, B2C and the $23B C2C larger-item market.
There is no denying that e-Commerce is changing how we live and shop as demonstrated by the increases in B2C parcels FedEx and UPS have reported in their recent financial results. eMarketer has reported that LTP (Larger-than-Parcel) categories such as furniture and larger consumer electronics are growing fast, in addition to B2C and C2C used items e-Commerce such as cars, antiques, boats, pets, etc. The Wall Street Journal has even recently reported on the trend of large-item white glove delivery driven by eCommerce.
One on-demand service to watch is UberCARGO given their new tagline, possible focus on using logistics to gain advantage on passenger economics, and the latest addition to its war chest. Cargomatic is driving higher revenue per stop with business deliveries of B2B freight. Both are very different models than most two-hour services.
He later told the local media: “It was something I had to do. I had this dream for 20 years and if I hadn’t done it I think I would have ended up in the funny farm.”
Larry subsequently quit his truck driving job to try his hand at being a motivational speaker and was even featured in a Timex ad in the early 1990s.
He later broke up with his longstanding girlfriend and started doing work for the US Forestry Service. On October 6, 1993, sadly he committed suicide by shooting himself in the heart in the middle of the Angeles National Forest.
God rest Larry’s logistically challenged soul. His obituary can be found at www.findagrave.com (seriously, there is a site called findagrave.com).
The pre-obituary announcement for many of today’s on-demand delivery services can be found in the recent New York Times Magazine article titled “Delivery Start-Ups Are Back Like It’s 1999”.
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